Chain Collapse Post Exchange

Rutledge88

Hi,

I am part of a housing chain (6 house chain) which is just about to collapse, 8 weeks after the proposed completion date!

We exchanged contracts in July, with an agreed completion date of 4th September (one of the parties in the chain was going on holiday hence the time between exchange and completion). On the 4th of September, with everyone's belongings in their respective moving vehicles. we were informed by our solicitor that the solicitors at the bottom of the chain didn't have the funds in hand to complete. At that point they were not giving out any details, so we believed it was just an admin error, so sent our belongings into the removers storage facility, ready for them to move it in on the Monday. We then found out that the first time buyer at the bottom of the chains mortgage had expired, and they would need to get it renewed.

Over the last 8 weeks, since then, we have been continually led to believe that it will complete soon, just waiting on a few more bits, so I have been living with parents and paying for storage, not wanting to be hit with another move fee, to take my belongings back to my old house. In hindsight it would have been cheaper just to stump up and pay the move fee!

Yesterday we have been told that the person at the top of the chain is pulling out, which is likely to cause the chain to collapse.

if each of the respective parties claims for the outstanding deposits (10% of the sale price) I am going to loose £9,500 (the difference between the 10% I owe and the 10% I can claim from my buyer) plus all the removals and legals fees that I have incurred.

The first time buyer who is at fault is my buyers buyer (i.e. 2 parties below me) do I have any way of going after him for the money I am about to loose? Does anyone have any experience of this?

Thanks

Joe

pimento

Have you 'signed contracts' or 'exchanged contracts'? If you haven't actually exchanged then it's just tough but if you have exchanged then you have to complete or pay the financial penalty.

libf

Doubtful that the buyer at the bottom will have any money for you to go after, to be honest, but it's a question for your solicitor.

eddddy

So you are number 3 in a chain of 6.

You exchanged contracts with your buyer - so you now sue your buyer for breach of contract because they didn't complete. i.e. for all the losses you have suffered as a result of the breach (storage costs etc).

And... your seller is likely to sue you for breach of contract, becuase you didn't complete. So you have to roll that into the amount you sue your buyer for.

Your buyer will then sue their buyer, who will in turn sue the FTB. i.e. the FTB ends up footing everyone's bill.


But the big risk is that FTB may well go bankrupt as a result. So number 2 might end up footing some/all of everyone's bill.

And the worst case scenario for you is that number 2 goes bankrupt as well, leaving you to foot some/all of everyone's bill.

Rutledge88

Pimento, we signed and exchanged back in July.

Thanks Eddddy, I thought that was the case, my solicitor is looking into it for me now. The only problem being that, she is a conveyancer, so is going to have to seek advice from their litigation partner, which is likely to cost me even more.

The way the contracts work seems fundamentally floored to me. Noone in the chain has done anything wrong except the first time buyer and we are all likely to incur some form of loss.

giddypenguin

I would argue this is the FTB solicitors fault, surely they should have had an eye on the mortgage expiration date/completion date and noticed the problem and not allowed the exchange to happen? Are they not neligent here?

Brock_and_Roll

Whether it is the FTBers fault or not may well turn our to be irrelevant if they have few assets to make it worth going after!

xylophone

The FTB buyer's solicitor should have checked that funds would be available for completion, particularly in view of the long delay after exchange? He has been negligent towards his client?

martinsurrey

Brock_and_Roll wrote: »

Whether it is the FTBers fault or not may well turn our to be irrelevant if they have few assets to make it worth going after!

that's not OP's problem, they would sue the second in the chain.

If the bottom of the chain cant pay everyone, the next up the chain is in trouble, if they cant cover the shortfall, the OP is in trouble.

so the OP (3rd in chain) will be sued for 3 peoples costs (4th-5th-6th) by the 4th person (who has been sued by 5th for 5th-6th costs) and the OP will sue the 2nd person for 3rd-4th-5th-6th costs.

its like a waterfall, but OP does not have limited liability.

G_M

All you can do is

1) account for all your consequential costs, expenses, losses etc and gather together receipts and evidence for each loss

2) wait to see what claims, if any, your seller makes against you for your failure to Complete your purchase as per that contract

3) make a claim against your buyer for 1) & 2) above for his failure to Complete your sale as per that contract

and wait and see what happens.

tom9980

Rutledge88 wrote: »

Hi,

I am part of a housing chain (6 house chain) which is just about to collapse, 8 weeks after the proposed completion date!

We exchanged contracts in July, with an agreed completion date of 4th September (one of the parties in the chain was going on holiday hence the time between exchange and completion). On the 4th of September, with everyone's belongings in their respective moving vehicles. we were informed by our solicitor that the solicitors at the bottom of the chain didn't have the funds in hand to complete. At that point they were not giving out any details, so we believed it was just an admin error, so sent our belongings into the removers storage facility, ready for them to move it in on the Monday. We then found out that the first time buyer at the bottom of the chains mortgage had expired, and they would need to get it renewed.

Over the last 8 weeks, since then, we have been continually led to believe that it will complete soon, just waiting on a few more bits, so I have been living with parents and paying for storage, not wanting to be hit with another move fee, to take my belongings back to my old house. In hindsight it would have been cheaper just to stump up and pay the move fee!

Yesterday we have been told that the person at the top of the chain is pulling out, which is likely to cause the chain to collapse.

if each of the respective parties claims for the outstanding deposits (10% of the sale price) I am going to loose £9,500 (the difference between the 10% I owe and the 10% I can claim from my buyer) plus all the removals and legals fees that I have incurred.

The first time buyer who is at fault is my buyers buyer (i.e. 2 parties below me) do I have any way of going after him for the money I am about to loose? Does anyone have any experience of this?

Thanks

Joe

Seems to me that the person at the top cannot pull out they are obliged to complete now. What should be happening someone correct me if i am wrong is the person at the top gets the order to complete (cant remember the exact wording) and everyone issues it on downwards through the chain, only after that has expired can they move on? so has that happened? surely they cannot pull out until that step is done.